3/22/2013 - National Flood Insurance Program renewed for another five years
In the summertime when the weather is warm and the kids are out of school, it's easy to lose track of national news events, particularly those that come out of the halls of Congress. But with it being National Flood Safety Awareness Week, it's important to remember that just a couple days after the Fourth of July 2012, President Barack Obama signed the Biggert-Waters Flood Insurance Reform Act into law, which essentially reauthorized the National Flood Insurance Program through 2017.
The passage is rather significant because for a number of years, the NFIP had been renewed on a short-term basis, largely because lawmakers couldn't come to an agreement about how it would be funded. But with this latest reauthorization, more than 5.6 million homes will continue to be guaranteed coverage, as will anyone else who decides to supplement their homeowners insurance policy with flood protection.
But, with the passage, also come a handful of changes that many homeowners will be affected by. For example, as noted by the National Association of Insurance Commissioners, premiums have been adjusted so that depending on where a property is located and if it's in a flood zone, costs will accurately reflect the level of risk the area has for experiencing high water levels. Fortunately, should premiums need to be adjusted, they won't happen all at once, but rather over a five-year period, increasing by approximately 20% each year.
Another alteration is with respect to condominium owners. Going forward, individuals who have flood insurance will be the primary consideration of how much compensation they will get rather than that total being determined by the adequacy of a policy purchased by the condo association or cooperative.
For more noteworthy reforms to the NFIP, click here.